Equity Crowdfunding As a Result

Issue 1 CUBED Q2 2016

Craft Beer Acquisitions >THE SECOND CROWDFUNDING EXIT Quarterly Roundup >£18M THROUGH THE PLATFORM Meet Our Team >PITCH OF THE QUARTER Contents

Foreword 4

About Us 5

Market Leader 6

Food and Drink 28

Crowdcube Insight 40

#FundedClub 54

Investor FAQs 66

In The Cube 70 Darren Westlake (left) and Luke Lang (right) Co-Founders of Crowdcube Foreword About us

Welcome to CUBED, our first quarterly publication Since 2011, thanks to our crowd Some of the businesses to raise finance about Crowdcube and the crowdfunding industry. over £150m has been invested on on Crowdcube include Mondo, the Crowdcube (£83m in 2015 alone), mobile-first challenger bank, which When Darren Westlake and I launched Crowdcube five funding over 385 successful raises raised £1m in just 96 seconds (yes that’s years ago, we were the first ever equity crowdfunding as a result. On Crowdcube, everyday right - 96 seconds!), Sugru, the world’s first platform anywhere in the world. In defiance of its investors can invest from just £10, mouldable glue, and household names like relative infancy, crowdfunding has come of age and alongside professionals, angels and Eden Project and River Cottage. is now recognised by many as a mainstream funding Luke Lang some of Europe’s leading venture option. Thanks to investment from our crowd of more Co-Founder capital firms such as Balderton Capital, The world’s first crowdfunded exits have than 270,000 people, hundreds of entrepreneurs have Luke cut his Episode 1 and Index Ventures. also come from businesses to fund on raised the seed-stage investment needed to make their marketing teeth Crowdcube after Camden Town Brewery working for a idea a reality, or secured the capital required to scale successful UK- Investors can handpick the businesses and E-Car Club were sold, delivering their business. based Service they want to back, from startups and Crowdcube investors with a multiple Provider marketing technology and early stage businesses right the way return on their investment. We’ve seen some great success stories from our internet solutions through to more established growth- for businesses. #FundedClub, Crowdcube’s growing network of funded Luke also ran his stage businesses, from a range of sectors. Named as ‘Most Active Investor’ by businesses, which have had a profound social and own marketing Beauhurst, a leading source of data on consultancy that economic impact, creating thousands of jobs and specialised in high-growth companies, Crowdcube expanding in the UK and overseas. This magazine sets digital marketing, is the UK’s first and leading equity B2B marketing out to demonstrate the power of the crowd and all that and marketing crowdfunding platform. can be achieved thanks to your investment. strategy.

We hope you enjoy it!

4 5 Market Leader. School of Economics.of School London includingthe commentators, and experts from industry sector crowdfunding for the equity and predictions research trends, latest Bringing you the Q1 2016 successful investment Quarterly Roundup in the UK

Thanks to the crowd, we’re still leading the way, with 50% of equity crowdfunding investment in the UK going through our platform

Despite only being five years young, The rapid and sustained growth of the equity crowdfunding has grown at a equity crowdfunding sector is challenging rapid pace and according to Nesta, it’s the status quo of the finance industry, the second fastest growing alternative not only as a result of a growing number finance sector - up 295% in 2015. of businesses turning to the crowd, but Crowdcube partnerships and collaborations with In March 2016, we announced that over Europe’s leading venture capital firms, £150m has been successfully raised Government-backed funds and global through the platform to date, more brands such as Amazon’s Launchpad, than any other UK platform, firmly all wanting to be part of the industry’s placing Crowdcube as the leading equity success story. Nesta states that the “UK crowdfunding platform. We were also online alternative finance market is growing 50% pleased to report the first successful increasingly complex, fluid and dynamic”. exits in equity crowdfunding were from businesses to fund on Crowdcube: E-Car £18m Club and Camden Town Brewery. This led to investors receiving a multiple return on their investment.

Total £36m

(Based on Crowdsurfer Data Jan 2016 - March 2016 excluding property crowdfunding platforms)

8 Market Leader | Quarterly Roundup 9 CUBED Quarterly Roundup

Start-up Early stage Growth £150,000,000 385 270,000 28% 45% 27%

Successfully Successful Registered Raised Raises Investors

The investment raised through our The most represented sector is The crowdfunded capital has also Crowdcube data forecasts that the platform has resulted in 385 successful technology, followed by internet had a wider economic and social businesses behind the 385 successful rounds, following investment from the businesses and then the food and impact. Equity-based crowdfunding raises are estimated to create more crowd, which now stands at more than beverage sector. To date, 28% of the now represents 15.6% of all UK seed than 7,000 new jobs in the first three 270,000 people. companies that have raised finance and venture-stage equity investment, years post funding. on the platform have been start-ups according to a recent report from Nesta seeking seed-stage investment, with and the University of Cambridge. 72% early or growth stage businesses raising growth capital.

10 Market Leader | Quarterly Roundup 11 CUBED Quarterly Roundup

Equity-based Crowdfunding Share of the UK Seed 15.6% Crowdcube has firmly established itself for venture-stage deals and joint third and Venture Stage Equity Investment Market. as market leader. In its report The Deal for growth-stage deals, sharing the 2015-16, Beauhurst, a leading source of accolade with leading European venture data on high-growth companies, named capital firms Balderton Capital and it ‘Most Active Investor‘ for funding the Index Ventures. 9.6% most deals in 2015. The report also listed Crowdcube as the top investor

5.4% Additional stats:

The fastest raise: The biggest raise: The £1 million club: Digital banking start-up JustPark, which raised There have been 34 raises 0.7% Mondo, which raised £1m £3.5m in March 2015. over £1m on Crowdcube, 0.3% in just 96 seconds in The business also attracted 24 of which ‘have’ been March 2016. the highest number of since the start of 2015. 2011 2012 2013 2014 2015 investors – 2,702

The biggest single investment: One investor put £1m into Sugru – creator of the world’s first mouldable glue – in July 2015.

Government backing: The first crowdfunded The first bond returns: The UK government exits: In 2015, E-Car Club Crowdcube Bonds raised invested £1.25m in nine was acquired by Europe’s over £16m and so far deals via Crowdcube in leading car rental company have paid back a total of (Based on Beauhurst Data 2011-2015) 2015 as a result of its Europcar, then Camden £722,000 in gross interest London Co-Investment Town Brewery sold to the to investors. Fund partnership. world’s biggest drinks company, AB InBev.

12 Market Leader | Quarterly Roundup 13 Writing in Centrepiece, a publication wisdom of the crowd of the Centre for Economic Performance, Estrin and Khavul state that: “The low transaction costs environment” of the Crowdcube platform “brings Crowdfunding investors make economically rational decisions, increasing network effects to bear on investor decisions according to new study from London School of Economics in early stage entrepreneurial finance.”

They continue: “As an alternative source of finance, Two-year analysis of Crowdcube The analysis shows that crowdfunding equity crowdfunding appears to have operated in a data shows that the ‘wisdom investors behave in an economically stable and predictable manner through its early period of rational way, making decisions based on emergence [in the UK]…we see no evidence of a stampede of the crowd’ has made information which is shared between effect from investors.” crowdfunding a “robust source the entrepreneur and investors, about of entrepreneurial finance.” company valuation and prospective The LSE professors’ conclusion is that crowdfunding growth, for example. is “a robust source of alternative entrepreneurial A study released by the London finance”, and that the information flow it generates School of Economics (LSE) – Equity The researchers also identified a actually reduces the biases inherent in traditional crowdfunding: a new model for financing collaborative mind-set amongst the forms of early stage entrepreneurial finance. entrepreneurship? – has revealed how investors, with a dynamic exchange crowdfunding investors behave, and of knowledge and interpretation of We’ve always known that investors are smart, and the basis upon which they decide which the available information and data. it’s great to have this confirmed by LSE. The findings businesses to back and how much to However, they found no evidence of quash concerns that the crowd is made up of naïve invest. a ‘herd’ mentality. While investment ‘dabblers’ who stampede into supporting pitches decisions are influenced by what other that seem popular or cool. Crowdfunding is a rational Professor Saul Estrin and Professor investors do, and the signals this gives marketplace, with investors and entrepreneurs Susanna Khavul carried out a two-year about the value and potential of a collaborating and sharing knowledge in a way that independent analysis of a proprietary business, the effect on investment leads to sound, well-informed decisions. dataset gathered from Crowdcube, is gradual rather than explosive and and interviewed investors directly, unstable: Estrin and Khavul found that Crowdfunding’s greatest strength is the diversity of to establish what they call “powerful one pound invested on one day of the the investor community, which builds a collective empirical evidence” on how equity pitch generates an additional 51 pence wisdom that gives the crowd the ability to identify crowdfunding works. of fresh investment on the following and back the best businesses. All but 7% of the 285 day, and an additional 76 pence over the UK companies that have successfully funded on next five days. Crowdcube are still trading, which compares very favourably with the Financial Conduct Authority’s (FCA) estimate that 50-70% of all new businesses set up in the UK fail within five years.

14 Market Leader | Wisdom of the Crowd 15 CUBED Wisdom of the Crowd

Crowdcube has a base of 249,500 registered investors. Saul Estrin Professor of The platform leads the UK’s equity crowdfunding managerial market with a 52% share, according to independent economics and strategy at LSE, the crowdfunding market researcher Crowdsurfer, and founding head of was responsible for more investments than any other LSE’s Department of Management, platform in 2015 (136 deals) according to Beauhurst, and a research which provides deep data on fast-growth companies. associate in Centre for Economic Recently released data from NESTA shows that the Performance’s equity crowdfunding market almost tripled between growth programme.

2014-2015, with a total of £332m raised in the last year. Susanna Khavul is a Leverhulme visiting professor The average deal size was £524k, a considerable at LSE, a Centre increase from the 2014 average of just under £200k. for Economic Performance Crowdcube completed a record-breaking year in research 2015, which saw £83 million successfully invested associate, and entrepreneurship through the platform, funding 166 businesses. It also and innovation welcomed over 116,000 new members to its crowd of faculty at the University of Texas investors and won 12 industry awards from the likes at Arlington. of Shares Magazine, TechCityInsider and City AM.

(Data was collected Q4 2015)

Image: www.designraphael.co.uk

16 Market Leader | Wisdom of the Crowd 17 be aware of the risks of investing in private companies, and be sure never to expose themselves more than they Investor insight can comfortably afford, in the same way you would treat assets in other markets such as the FTSE.

An interview with James Wise, partner at one of Europe’s leading What hints and tips would you give to Venture Capital firms investors? James Wise, Partner at Balderton Capital Always look at customer reviews, whether it’s on social James is a partner We interviewed James Wise at What sectors are you most at Balderton Capital, media, or from contacting them directly. You will learn Balderton Capital to share his insights Europe’s largest more from a customer who loves or hates the product interested in right now, and dedicated venture with the crowd on what he looks for fund. At 29, he is the than from any industry expert or pitch deck. why? in an investment opportunity and youngest partner of a venture fund in building a diversified portfolio. Europe, and works A growing number of VC-backed I try not to focus on specific sectors, on investments because whenever I do I have met an including 3DHubs, businesses are turning to Crowdcube to What do you look for in an Crowdcube, Sunrise exceptional founder who has convinced (sold to Microsoft ) raise funds, what do you think is driving investment opportunity? me otherwise! In reality, most investors and Workable. He that trend? previously helped have a few specific areas in which they set-up and run a The three main factors for me are the have some expertise. In my case it is charity, the Social I think it’s a great way for these companies to not only Business Trust, team, the vision and the timing. Team technology businesses, but within that which provided raise more capital, but leverage the wisdom of a crowd. is always the most important factor you have to be open to new ideas and capital and support Venture investors can offer a lot of help in some very to build enterprises in an investment. As investors, we concepts, as it is those businesses which tackling social specific ways, such as on financing and hiring, but know that we will be working with the challenge the consensus that can drive the problems in the UK. crowdfunding gives companies access to 100s and @jp_wise founder for a long time, so we have to highest returns. 1,000s of potential advisors and advocates. Personally, believe they have the ability and vision I also think a lot of entrepreneurs want to make the to build a world-changing business. Why is it so important to financing market more accessible and transparent, And it doesn’t stop with the founder, diversify your portfolio? and crowdfunding blows open the traditionally closed all the early hires will impact the scale network of venture investors. that the company can achieve. After team, we agree on the vision they have Most of the companies we invest in will for the future of their company, and of fail, as that is the nature of investing in the broader market. Finally we need to new and non-obvious companies. So agree that this shared vision can be built diversifying our capital across multiple sustainably in the right time period. It’s companies is essential, as it should be strange how often we see companies for angel investors as well. High beta who have a vision that is too far away companies can massively outperform from the current market. the market, but they can also massively underperform. So investors should always

18 Market Leader | Investor Insight 19 CUBED Investor Insight

What trends or predictions do you see arising for the UK crowdfunding industry?

I think there will be a huge amount of change in the next few years, as crowdfunding comes to rival both traditional angel funds but also retail banks. As well as more businesses raising funds this way, I think we will see the rise of super-angels on the platforms. Those who have proven themselves to bring huge added value, will continue to invest and offer advice to other investors. We will also see more tools that help investors manage their portfolio. It’s not easy being invested in 5-10 companies, but as that happens, the platforms will have to provide services to support portfolio management.

What is your favourite business that’s funded on Crowdcube?

There are too many to mention. Currently I am most excited about the Dirt Factory in Manchester, it is both launching in my home city and promoting a sport I love, with a sensible business model. I really hope they can make it work.

Why did Balderton invest in Crowdcube?

Traditional venture funding has its uses, but also its limitations. Crowdcube is disrupting the model by making access to funding accessible to more people, in a way that is more transparent and fairer, and challenges the closed networks. Crowdcube is a huge idea with a great team behind it. It could really shift the way private financing works in the UK and beyond. That’s an exciting and high impact investment to be involved in.

20 Market Leader | Investor Insight 21 Understanding the topic of tax relief §§Payment of CGT can be deferred Tax Relief can be complex, so we have put when the gain is invested in shares of together a quick guide to help get you an EIS qualifying company. started and answer any initial queries A quick guide to SEIS and EIS tax relief you may have. Please note that you SEIS should always seek independent tax advice if you are unsure of any aspect §§You can claim income tax relief of of the process. 50% on investments up to £100,000 per tax year; What does SEIS and EIS mean? §§Certain CGT benefits depending on the which tax year the investment The Seed Enterprise Investment Scheme was made. (SEIS) and Enterprise Investment Scheme (EIS) are government schemes designed to encourage investment into seed, 25% of investment through startup and growth stage companies by the platform could have been offering a range of tax reliefs to investors claimed back in tax relief. who purchase new shares in those companies. The crowd have backed more than 385 businesses on Crowdcube to date, How does it benefit investors? with 285 funded businesses eligible for either EIS or SEIS tax relief. This means EIS that out of the £150m raised through the platform, £37.5m could have been §§You can claim up to 30% income tax claimed back in tax relief to investors. relief on investments up to £1 million per tax year; §§Any gain is Capital Gains Tax (CGT) free if the shares are held for at least three years; §§If the shares are disposed of at a loss (for example, if the company enters insolvent liquidation) you can elect that the amount of loss, less income tax relief, be set against any income tax of the year in which they were disposed, or, on income of the previous year;

22 Market Leader | Tax Relief 23 CUBED Tax Relief

Are there any restrictions with Your claim can be made on the Self When will I receive my SEIS3 or claiming SEIS/EIS relief? Assessment tax return for the tax year EIS3 Form? Please note: in which the shares were issued. If you have an SEIS3 or EIS3 for a year for Most importantly, you need to be a The company must firstly have been The availability of any tax relief, including SEIS and which you have not yet received a tax EIS, depends on the individual circumstances of UK taxpayer in order to claim SEIS or trading for four months, or for SEIS have return you can request a change to each investor and the company concerned, and EIS relief. Moreover, you will not be spent 70% of the funds raised. may be subject to change in the future. If you are in your PAYE (Pay As You Earn) tax code, or eligible for SEIS or EIS tax relief if you are any doubt about the availability of tax reliefs, or the an adjustment to any Self Assessment connected with the company. You can §§The company will prepare all the tax treatment of your investment, you should seek payment on account due. You will still independent tax advice before proceeding with your find a detailed list of ineligibility factors necessary paperwork following a have to make the claim itself on your tax investment. in section 1.3 of the HMRC guide here. successful funding round. They will return when you get it. then make a list of investors who are interested in receiving tax relief, and How can I claim tax relief on Claims can be made up to five years send this information to HMRC. This my investment? after the investment was made. process can take up to 6 weeks; SEIS or EIS shares must be held for a §§Once the certificates are with HMRC minimum of three years to benefit from it will be approximately 6-8 weeks income tax relief, and as such should be before they are sent to the company seen as a long-term investment. If your to sign; shares are sold before you have held §§Once signed the company will then them for three years (for instance, if the send the certificates to you by post; company exits), you will have to inform HMRC and repay any income tax relief §§You can then claim any relief you are you have claimed. eligible for by sending the ‘claim form’ section of the SEIS3 or EIS3 form to You cannot claim relief until the HMRC; company sends you an SEIS3 or EIS3 §§If you are not in a position to send the form. For EIS it cannot do this until it has claim form, the documentation you been trading for at least four months, are sent will direct you on alternative and for SEIS it must either have been ways to claim your tax relief. trading for at least four months or have spent 70% of the funds raised.

24 Market Leader | Tax Relief 25 New record

Mondo reaches £1m in 96 seconds in record breaking raise We’re the first bank to Mondo is part of the wave of fintech Mondo turned down additional businesses challenging the UK’s financial investment offers from notable enable customers to become services sector through its smart use of international investors in order to include shareholders through a technology and customer-first attitude. its customers in this investment round. It is designed around a generation (so crowdfunding platform. Our called millennials) that are mistrustful This is Mondo’s second fundraise as it of traditional banks, and rely on their gets ready for a public launch and an customers are already helping smartphones to access the services accelerated roll-out of its services later and products they want, something the this year. us to build the bank from the traditional banks are being slow to do. ground up by alpha testing the mobile app. They deserve to be a real part of our journey to be a bank that people can trust and puts them back in control 1,898 756 £527 of their finances. We want to investors £1k avg. continue to involve them in investments investment future funding rounds.” 20 £10,417 Tom Blomfield, CEO of Mondo avg. investors invested per second per second

26 Market Leader | New Record 27 Food & Drink. #FundedClub hamper. to win aone-of-a-kind for you an opportunity beer, and nut butters including craft industry, the food and drink from news Sector What’s next for the food & drink industry?

Crafting a new future

At the end of 2015, Camden Town Brewery announced that it had been acquired by AB InBev, the world’s largest brewer and one of the biggest companies worldwide. This acquisition came just eight months after Camden’s successful raise of £2.75m on Crowdcube, and provides its 2,173 investors with a healthy return on their investment. Camden meanwhile can go on to expand and innovate on a larger scale than ever before.

Is this an unusual move by AB InBev?

In short, no. The beverages sector has a long history of mergers and acquisitions (M&A). Whilst historically many transactions have been large in scale, there has been a noticeable increase in recent years of the large global players purchasing craft breweries. Indeed, the acquisition of Camden was one of three craft brewery acquisitions announced by AB InBev in December 2015 (the other two being US brewers).

30 Food & Drink | What’s next for the food and drink industry? 31 CUBED What’s next for the food & drink industry?

Image: www.danielcolinhall.com

Notable craft brewer – craft beer now represents 11% of the With the food and drink acquisitions in 2015 total beer market in the US. By acquiring sector being the second craft breweries, larger players are most popular sector aiming to tap into the growth of the craft on Crowdcube, we look §§Heineken acquired a 50% stake in segment. The global brewers can also forward to seeing more Lagunitas Brewing Co., the California- significantly increase the distribution of success stories this year. based craft brewer the craft brands they purchase. Written by #FundedClub businesses §§SABMiller acquired London-based Conor Parsons within the beverage Head of Finance Meantime Brewing Company This approach to M&A, pushing acquired sector include Flavourly, brands through existing distribution Prior to joining DeskBeers, UBrew, Bellfield §§MillerCoors acquired Saint Archer Crowdcube in networks, has been widely used across Brewery and BrewDog, just Brewing Co., the San Diego-based January 2015, the wider consumer products space. Conor spent four to name a few. BrewDog craft brewer years at Goldman This includes categories such as food, Sachs where he was our first dual raise spirits and HPC (home and personal worked as an and funded over £3m. In mature beer markets such as the equity research care) and is expected to continue as Since then the company US, the UK and Australia, the large analyst within the larger companies seek to fill category Pan European has opened over 10 new incumbents have been consistently Consumer gaps or add category scale in response sites including international losing share to craft brewers. Whilst Products team to changing consumer demands. Indeed, primarily focusing bars, bottle shops, hot the mainstream portfolios of the global on beverage a recent survey of senior executives in dog hideouts and even a players have seen volume declines in companies. the food and beverage sector conducted DogHouse. Pictured above these markets, the craft category has by Ernst & Young showed that 67% is the new Soho bar. seen rapid growth and is becoming a of companies in the sector expect to meaningful part of the beer category pursue deals this year.

32 Food & Drink | What’s next for the food and drink industry? 33 CUBED Pip & Nut Pip & nut Pip & Nut is offering Pip’s success story so far Crowdcube members 25% off all orders over on its website, with the coupon, FundedClub so go and order We love seeing great businesses doing #FundedClub businesses. The first of yours today. great things, thanks to the backing of which features Pip & Nut, a business the crowd, Pip & Nut is no exception making a range of nut butters, which to this. We wanted to showcase some raised £120,000 on our site in 2014. of the milestones of our ever-growing

Meet Pp, Pp Nut’s founder

September 2013 December 2014 September 2015 January 2016

Wth an ntal £10,000 Crowdcube named Pp Sr Rchard Branson named Pp Nut completed a start-up loan, Pp made her Nut treeer f the Pp Nut as e f the UK t £525,000 prate fundng ﬁrst ever sales at a pop-up er , the team trt f ri iee round, wth £25,000 n shop n Shoredtch, and hred a new employee The company added The Grocer euty and £200,000 started road testng the and the ﬁrst jars were e rt r to the n debt to dre growth products at Maltby Street shpped to a warehouse trophy cabnet for the Coconut n 201 Market n Bermondsey ready to be sold Almond Butter

April 2014 January 2015 October 2015 watch this space...

Pp secured a Pp Nut landed onto Pp Nut was stocked n We look forward to seeng what’s next for ths manufacturng partner the sheles of Fortnum Mason along June 2013 July 2015 December 2015 #FundedClub busness and seed nestment September 2014 Selfrdges One of Pps wth 215 Marks Spencer proudest moments stores, whch became the After purchasng a super The brand deelopment Pp turned to Crowdcube to rase Pip & Nut won ﬁrst Pp Nut hred the thrd best sellng brand n the hgh powered blender, Pp and packagng was almost the money needed for launch supermarket lstng wth full tme employee et f ritih range started to road test recpes completed After nne days on the ste, Pp Ocado and wth three and prototypes Nut oerfunded to £120,000 ﬂavours launched, the The company reached ts company won the 2015 target of stockng The team celebrated wth plenty ret te r for 1,200 stores of gn eery product

January 2013 June 2014 May 2015 November 2015

Whlst tranng for the Pp entered the Escape the Pp Nut supported Nke’s Sansbury’s stocked Pp Pars Marathon, Pp had Cty competton to le e campagn Nut products n 4 stores the dea to launch an all rent freen a garden shed by serng nut butter on - the bggest order to date natural nut butter brand toast to oer ,000 Enough butter was After ﬁnding out that she runners produced to ﬁll two had won, Pp ut her ob to whole contaners start lng her dream

34 Food & Drink | Pip & Nut 35 Crowd pleaser

A collaboration between Crowdcube and BrewDog

We decided that being the world’s first and leading investment crowdfunding platform just wasn’t enough, so we’ve branched out and brewed our very own tipple – Crowd Pleaser (with a little help from #FundedClub business BrewDog).

Image: www.bigstyles.co.uk

36 Food & Drink | Crowd Pleaser 37 Competition time STOCK UP ON Share this magazine on Facebook nom bars and or Twitter to be in with a chance of SHare winning an exclusive #FundedClub nom popcorn to win food and drink hamper. All nom products are Free-from Facts for a healthy, free-from tasty ✔ 100% organic ✔ Dairy free ✔ High in fi bre ✔ Wheat free (bars & popcorn) The hamper includes craft beers, Indian wine, guilt-free snacks, salad treat when you’re on the go! ✔ Certifi ed vegan & ethical ✔ Gluten free (popcorn) dressings, nut butters, a recipe book and much more! ✔ Award-winning ✔ No refi ned sugars

nom bars nom popcorn Packed full of organic superfoods including virgin coconut oil, cacao nibs, oats From only 100 calories per bag, nom popcorn is naturally high in ﬁ bre and gluten- and oat bran to provide a tasty source of slow release energy. The protein nom free. The wholegrain corn is kettle-popped with virgin coconut oil and we add only bar includes 17g of organic pea protein, making it a delicious, healthy choice natural, unreﬁ ned sweet and salty ingredients to the corn, to create a totally tasty - perfect for exercise. treat that you can enjoy at any time.

Terms and Conditions Certiﬁ ed by Product Awards

1. All entrants must be UK residents and at least 18 4. Winners who do not respond to Crowdcube within THE years of age; 48 hours of being notified by Crowdcube shall THE AWARDS 2016 EDITOR’S 2. The competition shall end on 30 June 2016; forfeit their prize and a replacement winner shall CHOICE be selected; Find out more at nomfoods.co.uk BEST SNACK/FOOD LINE Search for nom foods 3. Winners shall be selected at random by Crowdcube and notified via the medium each 5. Full terms and condition are available here. winner used to share the magazine;

38 Food & Drink | Competition 39 Crowdcube insight. Crowdcube team. team. Crowdcube you to some of the we’d like to introduce Manchester and Spain, Cardiff, London, Devon, than people 80 across growinga team of more years onFive and with 5 YEARS ON

Crowdcube celebrates five years of equity crowdfunding

Happy Birthday

February 2016 marked our fifth birthday, so in celebration we put together our timeline of significant events and milestones so far. The past five years have been amazing. To think that we’ve created a world first in equity crowdfunding, forming a global company, employing 80 people with five offices is just incredible in what’s a relatively short time. We owe it all to those who believed in us in those early days and of course, the team we’ve built.”

Darren Westlake, Co-Founder of Crowdcube

42 Crowdcube Insight | 5 Years On 43 CUBED 5 Years On

44 Crowdcube Insight | 5 Years On 45 Meet the team

An insight into our Legal team

Paul Massey Martin McAnaney Tom Corrick Tom Potts Adam Connors Robert Andari General Counsel Compliance Officer Legal Counsel Legal Counsel Paralegal Legal Counsel

Paul’s legal experience Martin worked for State Tom is a solicitor Tom joined Crowdcube in Adam graduated from Robert is a corporate includes working in City law Street Corporation in their specialising in corporate August 2015, after working the University of Exeter finance solicitor with firms, blue chip technology middle and back office law. He trained at a as a corporate solicitor before undertaking legal a graduate law degree companies and start- functions. He began his regional firm in Devon, for national law firm training in Bristol. Prior to from Kings College, ups. He spent four years career by executing trades before working in the firm’s Shoosmiths. He trained joining Crowdcube in July London and postgraduate leading commercial legal on behalf of institutional corporate and commercial at Ashfords, where one 2015, Adam worked for a degree in Public Policy work at eBay before joining clients in international team. Prior to moving back of his first projects was Devon based solicitors’ firm from the London School Crowdcube. Paul also markets. He then moved to the West Country, he helping with the formation specialising in insolvency of Economics. Robert launched his own start-up into post trade compliance worked as part of the in- of Crowdcube in 2011. and litigation for SME worked previously at MW and is passionate about for a number of clients house legal team at London After graduating from the companies. Eaglewood, a hedge fund helping others raise finance which included Goldman City Airport. Tom holds an University of Cambridge, specialising in alternate to do the same. Sachs, Morgan Stanley, LL.B and an LL.M from the Tom started his career finance investments, and in M&G and Mercer. University of Reading. as a paralegal at a global private practice at Clyde & shipping company. Co. He has also worked in a compliance function for a wealth management firm in Luxembourg. Robert is based in Crowdcube’s London office.

46 Crowdcube Insight | Meet the Legal Team 47 Two years in the Cube, be at the core of business operations and Our legal team product design. Creating new innovative what have been your key products that comply with our regulatory achievements? regime is challenging but rewarding when Q&A with our experts, Paul and Martin we see SMEs raising investment to create I lead Crowdcube’s legal and compliance innovative products and jobs. We have a team based in our Exeter headquarters. value at Crowdcube called “Be the Crowd” What due diligence (DD) do are prepared and engaged. We have an My role has developed a lot over the two and my team constantly works to put years that I have been at Crowdcube you do on businesses seeking experienced and friendly team to help and investors first which I am very happy to like any good tech startup, we iterate our and I am now lucky to have a great shout about. funding on the platform? methods and technology to improve the legal team to work with. My team are process or add extra checks as we uncover continually developing efficient processes I joined the board of European Crowdcube’s due diligence process takes new anomalies. We also integrate with and technologies to manage the legal and Crowdfunding Network because a number place before a pitch goes live and we put third party credit and data providers to operational aspects of the business. It is still of the laws that set the boundaries of a lot of thought into protecting investors. do background checks. Our due diligence very hands on as every company raising crowdfunding stem from European Crowdcube is regulated by the Financial can mean that companies are rejected or funds with us is different. rules. The Prospectus Directive has been Conduct Authority (FCA) so we have rules required to restructure or make specific a particular focus recently as this key and regulations that guide my work. A big disclosures to protect or inform investors. We manage the legal aspects of our European investment law is under review. part of due diligence is behind the scenes, crowdfunding transactions including carrying out due diligence before deals but it is a vital part of building trust with What type of information do I am also proud of the role that legal have our investors and we do not take that trust go live on Crowdcube and assisting you check as part of the due played in developing co-investment models for granted. Our due diligence covers many with issuing shares after funding. where the crowd is able to invest alongside areas including financial checks, corporate diligence process? Crowdcube is regulated by the Financial venture capitalists. I met Wayra soon after legal review of shareholder rights, along Conduct Authority and my role includes I joined Crowdcube and worked with their with my compliance review of the pitch or An average Crowdcube pitch can have understanding and implementing the legal team to enable co-investment for advertising content. anything up to 40 statements that need to crowdfunding regulations and other laws startups including OpenDesk, The DoNation be backed up with independent evidence to ensure that we treat customers fairly. and Hubbub. Crowdcube also pioneered We are also proud of the fact that we that we keep on file. Examples of the We review and approve marketing content co-investment when the crowd invested into use our bespoke technology to make due kind of evidence that we look for include and our website to ensure they are fair, Crowdcube alongside Balderton Capital. It diligence efficient, scalable and recorded. proof of patents, market share data, press clear and not misleading. There is always is now routine for Crowdcube to provide This Regtech (nothing wrong with a mentions and proof of revenue to name a something new and unusual to do. We crowd capital (funds + brand ambassadors) buzzword!) side of our business enables few. But it’s not always straightforward! recently approved a financial promotion for alongside top-tier VCs in London and Crowdcube to facilitate SME equity finance We’ve had entrepreneurs rummaging the side of the world’s largest blimp. beyond. Series A fundraises such as Mondo, on a scale that has not been seen before around in their mothers lofts trying to Rentify, Sugru and JustPark are investment and it is exciting for me to be a part of that. find graduation certificates and had to get Looking back over the last two years since I opportunities that were simply not available evidence about a specific water that was joined Crowdcube, we’ve had the excuse for to the crowd 12 months ago. That is a huge It can take 3-4 weeks for a company to used for brewing a beer. lots of great parties and we have achieved achievement for the Crowdcube team. complete our due diligence process, longer a lot. I joined as employee number 16 if the company or fundraise is complicated Martin McAnaney and we are now 80. I am proud of the Paul Massey so it is important that entrepreneurs Compliance Officer legal team which we have integrated to General Counsel

48 Crowdcube Insight | Our Legal Team 49 Meet the team

An insight into our Financial Analyst Team

“The financial analyst team at In doing so the team attempt to Crowdcube review the financial bring a risk balanced approach information (historical and to their review of applicant firms. projected) of firms that raise They work closely (and sit beside) funds on our platform. our legal team to raise any issues that are relevant to both teams In determining the suitability of (Director’s loans, complex group Bill Simmons Colin MacLaughlin Juan Alaimo Ryan Gralia Tej Panesar a firm for a Crowdcube raise we structures, suspicious company CFO Investment Manager Financial Analyst Financial Analyst Head of Credit and Equity Risk pay particular attention to the activity etc). A chartered management Colin is a qualified Juan spent five years as an Ryan spent over four years firm’s: accountant, Bill has held accountant and MBA. He offshore equity research in M&A and corporate Tej Panesar has worked Our teams are passionate about FD and CFO positions at trained with Ernst & Young analyst for an Investment finance at Deutsche in banking and private Ask Jeeves, Myspace and before joining Harrison Bank. He covered the Bank, Houlihan Lokey and equity for over 15 year. §§Detailed financial model: startups, technology and SME Rated People, and more Street Real Estate Capital Canadian Telecom Services JPMorgan. He also spent As Crowdcube’s Head of Used to assess cash burn and investment and it’s why we came recently has applied his and subsequently BT market and coordinated two years in accounting Credit and Equity Risk he skills & knowledge at a in London. He has also the Global Telecom as a financial controller at has brought, adapted and runway as well as key drivers to work at Crowdcube. As such we number of start-up and previously supported Services team. Juan holds Citigroup. Ryan graduated implemented a traditional of growth have an ethos of providing value, early stage businesses. He several early stage a Licentiate in Economics, with an Honors degree in risk focused approach, transperancy and fairness to the understands how difficult companies and non-profits cum-laude degree from the Economics from Indiana to a rapidly evolving §§Credit score and associated it is to raise finance for in the UK and US. University of Buenos Aires. University where he was and nascent financial Crowd.” new companies and is part of the Investment services industry, in equity information: Informs our risk passionate about the role Banking Workshop. crowdfunding. Tej was assessment of the firm we have in helping finance CEO of a Polish real estate businesses. development firm for 10 years and has worked in §§Filed or Management accounts: various fintech startups. Used to verify historical He began his career in Citigroup as a corporate information declared by the banker and is a graduate firm in the Crowdcube financial of the London School of Economics. snapshot §§Proposed valuation

50 Crowdcube Insight | Meet the Financial Analyst Team 51 the Northern Powerhouse The Greater Manchester Business We asked Adam what he was We’ve opened a new office in Manchester Survey 2014 (published October going to look for in businesses 2015) highlights that 34% of local seeking to raise funds on businesses who sought finance Crowdcube, and what his favourite last year reported experiencing #FundedClub business is. We have expanded into the North of Manchester, aims to help young British difficulties with arranging it. The England with a new office, which has entrepreneurs make their ideas come to Adam Gillet most significant reason (26%) was “In short, I look for great ideas, just opened in central Manchester. life. It has built the world’s largest mobile Senior Business Development that finance providers were not some traction; a credible and Senior business development manager, mentoring app and has already attracted Manager lending. determined team, and scalability. Adam Gillett, has been appointed to brand partners and coaches that include Adam is These are the things that interest lead the regional team. ex-Dyson CEO Martin McCourt, Virgin responsible We already have a vibrant us and lead to much deeper Media Business chief Jan Collins and for Crowdcube North, supporting investor community in the North qualification and further challenge We’ve already helped nine businesses in media entrepreneur (and Eurythmics high growth of England, and there is definitely around the business’ forecasts. the North West to raise more than £1.4 front man) Dave Stewart who will be the businesses across the Northern an exciting opportunity to further million in the last two years, including company’s Creative Director. Powerhouse to stimulate the start-up scene in My favourite business would have Ideas Britain which secured £270,000 to raise equity on the Crowdcube the North West that is already to be Dirt Factory...it will be an launch in the UK. Ideas Britain, based in platform. Adam benefiting from the Government’s exceptional indoor BMX facility founded a risk assurance multi-million pound support for that welcomes all levels of ability consultancy, the region. We are determined and will act as a social hub for working with SME businesses across to put Crowdcube at the heart enthusiasts. The business is also multiple sectors of the creation of the Northern really scalable and plans to reinvest including tech, food & drink, powerhouse. profits to roll out across the UK.” education and many others.

52 Crowdcube Insight | The Northern Powerhouse 53 #Funded- Club. Crowdcube. businesses to fund on growing of network insights into our ever- latest and The news in THE News

§§ Farmdrop closes £3 million §§ Tempus Energy raises £3.78 funding round million

This year, Farmdrop closed a £3m Tempus Energy, which raised over funding round led by Atomico, the £600,000 from 235 investors on investment company founded by Crowdcube last summer, has secured Skype co-founder Niklas Zennström. a further £3.78m of funding.

§§ Kellogg partnered with §§ easyProperty secures Plan Bee £25 million of investment

Kellogg partnered with Plan Bee to easyProperty has recently secured establish and manage the on-site £25m of funding from a London-based honeybee hives and commit to its hedge fund and consortium of angel ongoing sustainability plan. investors.

To find out more about the funded businesses network, visit the #FundedClub hub today. Farmdrop

56 #FundedClub | In The News 57 Where are they now?

Find out what some of the businesses have achieved and where they are now, post-funding

Beara Beara

Beara Beara has opened its new store in central London and has expanded its team since funding on Crowdcube. The founder, Jake Bullough, also gives an overview of the company’s financial performance to date and plans for the future.

Blanco Nino

Blanco Nino, the Mexican food company, raised over £120,000 in 2014. Blanco Nino now employs nine people, operates a 19,000 sq ft factory and has customers across Ireland, the UK and Germany.

7Billionideas

Thanks to the crowd, the CEO of 7billionideas raised finance three years ago on Crowdcube. The company has worked with over 100 schools and 25,000 students in the UK, along with building partnerships with major UK education bodies and much more.

Eden Project

Thanks to 354 investors, the Eden Project raised £1.5 million through a Crowdcube Bond in less than 24 hours. Since then, the company has appointed a new Chairman of Trustees, received planning permission for a £6 million, 115-bedroom hotel and launched degree level courses.

58 #FundedClub | Where are they now? 59 Guest Article: Emoov

Backed by Venture Capital firms and the crowd

Guest article from Russell Quirk, founder and CEO of eMoov. eMoov, an online estate agent disrupting the market, successfully raised over £2.6 million on Crowdcube last year. We wanted to find out from Russell Quirk, eMoov’s founder and CEO, why he turned to the crowd after successfully securing venture capital funds from Episode 1 and Maxfield Capital.

60 #FundedClub | Guest Article: eMoov 61 CUBED Guest Article: eMoov

Customers love eMoov.

When you save somebody thousands These feelings of frustration of pounds, they tend to look at you serendipitously coincided with the rise After shopping around various The day we closed the round, and favourably. In the early years, when of equity crowdfunding as a legitimate options and structures I decided after a hell of a lot of hard work, online estate agency was in it’s infancy, avenue of investment for a company to go with Crowdcube and set the we had banked £2.7m and had and the concept was not known by the at our stage of growth. I had witnessed minimum target of £1m – taking an extra 765 investors on our cap general public, many customers showed other companies lead the way and raise inspiration from other big hitting table. VC’s and ventures fund had curiosity about the internal workings significant +£1m rounds which set a crowdfunding rounds such as also joined in on the round. Russell Quirk of the business. I was asked by several precedent and a blueprint in which to eMoov Founder and Sugru and Just Park. Our internal people about the possibility of investing base our own crowdfunding campaign. CEO target was to match or surpass That’s 765 people who have an in eMoov and if there was any way they With established VC heavyweights such Russell has these campaigns. invested interest in eMoov’s could get “a slice of the pie”. as Robin Klein (Just Park) and Simon pioneered the success. It’s 765 people who are process of selling Murdoch (who shared my enthusiasm online, having The marketing team was heavily rooting for the company. It’s 765 I constantly found myself having to when I suggested the idea), equity started eMoov in involved in the crowdfunding brand ambassadors. It’s 765 2010 after selling turn away friends, customers, staff and crowdfunding had the stamp of approval his successful high campaign. This was because people who can join us on our family. Unfortunately, there was no way from venture capital and fundraising street business. it was just as much about the journey and share in our success. His passion for of structuring smaller investments from experts. These guys are seasoned customer service exposure that the campaign those who did not have six-figure sums veterans who are driven to innovate and industry bought to the company as it was That’s the magic of crowdfunding. insight has seen to invest. I thought this was a grave and support people with ambitions the company thrive about the money raised. shame. I wanted these people to join me to grab significant market share in age and Russell become We received unprecedented To find out more about eMoov, a property expert in changing the estate agency sector for old industries. within the media traffic and the round positively visit: www.emoov.co.uk the benefit of the consumer. spotlight.companies. affected listings.

62 #FundedClub | Guest Article: eMoov 63 BrewDog Soho

Image: www.danielcolinhall.com

64 #FundedClub | BrewDog Soho 65 our Anti-Money Laundering check, an identity assessment ensuring all investors are who they claim to be. We are Investor FAQs required to make these checks as per our regulation by the Financial Conduct Authority (FCA). Don’t worry, the anti- laundering checks are secure and have no effect on any The top five most frequently asked questions credit scores.

We will email asking for one document to confirm your identity and one to confirm your address if you fail the How can I invest? auto-check, and provide you with information on which documents we can accept. Unfortunately, if we cannot Investing in equity: you will be emailed To invest you will firstly need to register verify your identity we will be unable to process your a copy of the adopted Articles of as a member. Once you have found a investment, and it may be cancelled. pitch you like, state the amount you wish Association and given seven working to invest you wish to invest and enter days to review them. During this time you can query, reduce or cancel your Does overfunding affect the amount of your payment details. Please note there equity available to the crowd? are no fees for investing and no payment investment by emailing support@ is taken out at this stage. Once a pitch crowdcube.com. Once the final legal Once a pitch reaches its funding target it may choose closes to investment, you will be notified documentation is complete we will email to ‘overfund’, enabling the company to accept more via the ‘7 day email’ and payment will your share certificate to you, which you investment in exchange for releasing more equity. commence after this. can also download from your Crowdcube portfolio. Investments made during this time have the same rights as those made before. Payment is only taken once the pitch hits its target, and after the completion of Investing in a bond: you will be given To explain how overfunding affects the equity available legal documentation, which we handle. fourteen days to review the final to the crowd, a company that initially offered 10% equity If the pitch does not reach its target, no documentation, during which time in exchange for an initial funding target of £100,000 will money is taken. You will be notified by you can query, reduce or cancel your need to release more equity as follows: Crowdcube in both circumstances. investment by emailing support@ crowdcube.com. We will then collect What happens once the target payments and transfer funds to the bond issuer. Once the final legal amount is reached? documentation is complete we will email you confirming your bond certificate has Once a pitch achieves its funding target been issued and is downloadable from the business may choose to ‘overfund’, your Crowdcube portfolio. whereby the company can accept further investment in exchange for releasing We can accept payment via Visa and more equity. Anyone who invests during Mastercard debit cards as recognised this time has the same rights as those by our third party payment provider who invested before the pitch reached Stripe. Unfortunately we cannot accept its target. payment via credit card, cheque or direct transfer. We will also run you through

66 Investor FAQs 67 CUBED Investor FAQs

What happens after the share How do I diversify my portfolio? certificates have been issued? According to Nesta, diversification should Once the investment round for a pitch has been be considered when making an investment. captured and share issues complete, we advise Diversification involves spreading your money across all businesses to keep investors updated regularly various kinds of investments, with the aim of reducing on the company’s progress. Typically this will be a your overall risk. short quarterly update, and a larger annual update. Crowdcube also regularly posts company news from Having a diversified portfolio means that even if a the #FundedClub via the blog and social channels. few of your investments are successful, they may deliver a large enough return to cushion potential The business you have invested in is responsible for losses. Since we started, less than 7% of businesses delivering any rewards offered. These can only be to fund on Crowdcube have failed, demonstrating the claimed once the pitch has closed to further funding, sophistication of our crowd. and share certificates have been issued. So far there has been over 385 successful raises on the The bond interest payment schedule varies according platform, ranging from technology to food and drink, to the company and is set out on each bond’s pitch which means that you have the opportunity to diversify page, or in the bond Invitation Document, if it has your portfolio across a variety of sectors and growth one. It is important to carefully read the pitch page or stages. Also, as the minimum investment is only £10, it Invitation Document to understand what each bond is feasible to invest in a variety of businesses, no matter is offering. Normally, but not always, bonds make how much you are prepared to invest overall. interest payments quarterly or biannually, and are managed through the Crowdcube platform.

You will be asked to enter bank account details into your Crowdcube account before each interest payment date.

68 Investor FAQs 69 In the cube Top 3 sectors The stats that count

Matt Cooper Darren Westlake Commercial Director Co-Founder Pitch of the quarter: Favourite business of all time: Mondo Technology BrewDog Fastest “The second Mondo landed we all knew it was going to be a success but £1m in 96 seconds verges on unbeliev- “They’re controversial, unpredictable, Funded able. As the fintech sector continues to pick up pace, disruptive and the most important fac- the mobile first challenger bank is well on it’s way to tor; I love their beer.” £1,000,000 disrupting an age old industry weighed down with tech- Largest nical debt. It was a pleasure to be able to offer a deal Single Investment £1m in 96 seconds of this stature to the crowd.”

Two exits Internet Business E-Car Club Michael Wilkinson and Head of Equity Camden Town Brewery £ Deal of the quarter: GripIt Largest “GripIt, the Dragon’s Den success story Raise Most highlighted the crowd’s love for innovative Investors products and hardware. Jordan, with the guidance of Deborah Meaden, pitched perfectly through the online medium, the award- £3,514,110 Food and Drink 2,702 winning product resonated with the crowd and momentum took it all the way up to £1.5m within six days.”

70 In the Cube 71 Feeling inspired? invest today.

Investments of this nature carry risks to your capital. Please #InvestAware. Approved as a financial promotion by Crowdcube Capital Limited which is authorised and regulated by the Financial Conduct Authority (no. 650205).